סמינר באסטרטגיה

Speaker: David Zvilichovsky, School of Managment, Tel Aviv University.

Abstract: 

Financing through crowdfunding, where future consumers fund production, is growing rapidly. We derive the optimal crowdfunding contract and show that it serves as a price-discrimination mechanism by forcing pivotal consumers to pay a premium above the expected future spot price, thus increasing the entrepreneur's profits even in the absence of financing constraints. This type of contract always increases production and may increase welfare. 

Interestingly, entrepreneurs respond to an increase in financing constraints by further increasing production. 

In such a setting reducing the cost of capital, a common policy instrument used for spurring innovation, may unintentionally reduce welfare.